Upper West Sider Tony Danza called into WNYC on Friday to speak to the mayor about all the mom and pops that have been closing in the neighborhood. And he mentioned one particular store that’s not a mom and pop — the Starbucks on 67th and Columbus that closed last year when the landlord hiked the rent to $140,550 a month.

The conversation became a back-and-forth about the disappearance of small shops. Escalating rents have forced many beloved shops out of business — Big Nick’s anyone? — and various proposals have been floated to slow the trend. But the mayor’s office has been resistant to commercial rent controls and a proposal called the Small Business Jobs Survival Act, which would give commercial tenants a right to get a lease renewal.

De Blasio’s reticence is evident on the call. Danza seems open to the idea of commercial rent control, but the mayor makes a more amorphous request when asked what should be done if a beloved business is forced to close: “I would urge the landlords to be less greedy.”

The transcript was provided by the mayor’s office (much of it is De Blasio giving a plug to Danza’s downtown cheese shop).

Brian Lehrer: Tony Danza is calling in, how about that.

Mayor: Wow.

Lehrer: Tony?

Danza: Good morning, Brian. Good morning, Mr. Mayor.

Mayor: How you doing, Tony?

Question: I’m very well, sir. Thank you very much.

Mayor: Tony, I want to just commend you. I tried some of your smoked mozzarella.

[Laughter]

Can I do an on-air endorsement?

Danza: That’s very nice.

[Laughter]

Mayor: Tony Danza’s smoked mozzarella at his shop in Little Italy – go there right now, New York City. And I’m saying that – I’m a grandson of Neapolitan, so I know something about smoked mozzarella.

Danza: [Inaudible]

Mayor: [Inaudible]

Danza: Listen, Mr. Mayor, that actually brings me to my question. I’d just like to know what your thoughts are about what I like to call the ‘neighborhood wasting disease.’ You know we have so many longtime establishments that have anchored neighborhoods in this city that are just being pushed out by exorbitant rents. Now don’t get me wrong, I don’t know how you legislate that. But I’d just like to know what your thoughts are about going forward. Like, where I live on the West Side, on one block – and this is the truth, this is what’s really kind of startling, is that Starbucks had to leave because they couldn’t pay the rent.

Mayor: Wow.

Danza: So, that seems like some crossing of a Rubicon or something –

Mayor: You know you have a problem when Starbucks can’t afford the rent.

[Laughter]

Tony –

Danza: That’s what I’m saying. So, I just would like to know what your thoughts are going forward.

Mayor: It’s a great question. And, Tony, first of all, thank you for all you do for the city and everything you’ve done as an actor. But before I answer the question, why don’t you remind people what your store is and where it is.

Danza: It’s Alleva –

Lehrer: Say it again. The first part of that got clipped. Say it again.

Danza: Alleva. It’s on the corner of Grand and Mulberry in Little Italy. It’s celebrating it 125th anniversary in October. It was in the Alleva family for all these years and a few years ago a friend – a couple of friends of mine and I bought into it. We’ve been trying to run it and keep it alive because we end up feeling more like curators than store owners because there’s, you know, because of this thing that’s going on in the city.

Lehrer: This is not –

Mayor: Well, Tony, I think first of all. Your place is amazing and thank you for helping to save it –

Mayor: I’m not plugging a product. I am talking about our patrimony as New Yorkers. This is a store that’s been there 120 years – you said 120 years, Tony, correct?

Danza: 125 – 1892.

Mayor: 1892. And it is part of our heritage. And I agree with Tony’s point. We’ve got to figure out every conceivable way to keep these particularly – these extraordinarily, meaningful stores that’s so much the fabric of our community.

Danza: You know, Mr. Mayor, not to interrupt but all the stores are meaningful. The smaller mom-and-pop places that I go get my paper in. It’s not there anymore. Just everything. It’s just –

Mayor: Yeah, but Tony, wait a minute. I want to answer your question. But I do – I want to make a little differentiation because I think – I always used to talk about, there was a place called Manganaro’s [inaudible] on Ninth Avenue that was there for also over 100 years that unfortunately closed a couple years ago. My grandfather went there when he first arrived in this country in 1905. I mean some places are –

Danza: [Inaudible]

Mayor: You know, really part of our persona as New Yorkers. I think they need special attention. The public sector has a tough challenge here because we are generally not in the position of subsidizing businesses and we don’t really have another great tool to do it. The first thing I want to say is, this is a case where some people could step up individually. You just did that. So, I want to commend you because there’s plenty of people in this town who have money. There’s plenty of people in this town who have celebrity who could step in and save some of these icons of New York City, and you did the right thing. I would urge more people to do it.

But this is a bigger point about how do we protect small business in general. What we did that we could do, Tony, first, reduce the fines that – and we still have more to do on that. When I was – back when I was public advocate we found that previous administration had a pattern of over-fining stores particularly immigrant stores, particularly outer borough stores are all sorts of examples. But those fines were really making it impossible for a lot of stores to keep going.

We’re steadily reducing the amount of fines. We want health and safety, of course. We want stores to play by the rules but we can achieve that a lot of times without financially burdening them. So, that’s point one.

Point two is we started legal assistance programs and small grant programs for older stores in particular to make sure that they’re not being kicked out because some landlord cheated them on their lease or they didn’t have a lawyer to protect their interests. And again sometimes a small grant can make a big difference for a store. So, we’re trying to innovate. I don’t have a big solution. Some people have talked about tax credits and things like that. The problem is when you compare that to all the other things we need to spend money on, it’s hard to put that over you know policing and schools and so many other challenges we have.

Lehrer: Tony, do you have a policy proposal to make regarding commercial rent?

Danza: I wish I did. I’m at my wit’s end. I mean, I don’t know what to say. I mean, you know, I’m particularly, because, you know, as soon as I walk out the building I see the empty stores, places I used to hang out in like the –

Lehrer: Do you want some commercial – and Tony, I’m going to have to move onto another caller in a minute but do you want some kind of commercial rent control which the administration and City Council have not gone for or something?

Danza: But at some point we many have to think about something like that. I don’t know how you’d do that in our society, you know? Tell landlords this is, you know, a cap. Or make some of a thing where the increases aren’t so large immediately. So, you know what happens, they come and throw you a big increase and then what do you do? You see what I’m saying? So, maybe if we could moderate that, maybe that could be –

Mayor: Tony said something very important, Brian. He said, “in our society.” Look, let’s be really cold here. It’s a free enterprise society that is not particularly warm and friendly to things like older stores, mom-and-pop stores. I would urge the landlords to be less greedy. If you’ve got a store that’s part of the fabric of a community, guess what, you could stop overcharging and let them survive, and you’re still going to be wealthy –

Lehrer: But urging them to be – like, you know as well as anybody that urging them to be less greedy isn’t going to change anything –

Mayor: I’m not saying I believe –

Lehrer: We have residential rent controls of various types in this city.

Mayor: Yeah, but you also know those were created in a different time. And the challenge on commercial rent control, it’s very legally dubious. Look, the entire – this not a news flash. The entire legal system is based on property rights and supporting a free enterprise system that needs in so many ways more regulation but our legal system isn’t built that way often.

So, I do think we should keep looking for a more stringent solution. I’d be very interested in one but I also want to – I want to lay this out exactly as what’s happening here. There’s a series of individual decisions and some stores are so sacred if you will, some are so important to this city, we should put pressure on those landlords to lay off and let them live. And by the way they add to the character of communities and if you want a capitalist argument, they add to the value therefore because they are part of what make communities special.

Danza: You’re preaching to the choir, believe me.

Lehrer: Tony, thank you for adding your voice.

Danza: Thank you very much, Brian. Have a great day. Take care, Mr. Mayor.

To bring a little truth to the situation tho – yes, that space the starbucks is in is vacant now and the landlord is asking for an absolutely ridiculous amount of rent as noted in the article. But the starbucks was always planning to leave that location and move somewhere smaller, because they’ve been downsizing their stores as a matter of policy for some time – they can push just as much product out of a space that is half the size (and in fact they relocated this store a few blocks west), and not subsidize the freeloaders who come in and use the space as an office for hours without buying anything (or buying just one cup of coffee).

I have no particular animosity nor loyalty to starbucks – I go to SB if it’s what’s available, but on the UWS I’m more partial to the hyperlocal spots like boxkite if and when I can get a seat.

All that being said, $140K/month is absurd. Heck, the more than $20K/month they want for a tiny sliver of a storefront on Columbus (think cellphone shop or the final resting place of Maya Shaper) is also completely absurd – this is why we end up with 80 different stores that “sell” nothing but white button down shirts and grey slacks.

(by “sell”, I mean these stores serve as really expensive advertising show rooms, because I have yet to see more than one customer ever shopping in any of these places – I spend an afternoon counting one day)

Yes, the trend for SB is to “downsize”, and exactly for reasons given.

Starbucks can still sell enough coffee and other products for those that want things “to go” from any sized store. OTOH too many large locations have become nothing more than combination senior centers, after school centers, hang-outs, home offices, homeless shelters, and other such.

It is rather ironic that SB introduced the whole *coffee house* hangout concept, that would go on to become famous via sitcoms like Friends and Frasier, but enough is enough.

Often these persons purchase one product (if that) and then remain for several hours chatting, reading the newspapers (which are supposed to be for sale), and of course the free WiFi

SB has been covering, removing, installing less of power outlets for several years now. They claim it is to deal with various “issues” regarding customer safety. However when coupled with the bathroom receipt/code scheme you have to wonder about the real intent.

Still at least in NYC if you are a low income person SB is a good deal during and after hours. You can get free WiFi and even food after hours if willing to dig through the garbage bags when SB throws out unsold ready made food.

There was a McDonalds in Flushing that tried to combat the “freeloader” problem — in that case, the local Asian Senior Citizen population would all congregate there in the morning, and stay all day hanging out — a de facto senior center. McDonalds tried to force them out, and there was a huge outrage in the community about how McDonalds was discriminating etc.. The McDonalds up on 104th and Broadway is similar. Folks (maybe) buy a coffee, and stay for hours on end. Frankly, I dont think it matters to them one way or another.

“It is rather ironic that SB introduced the whole *coffee house* hangout concept, that would go on to become famous via sitcoms like Friends and Frasier”.

You’re seriously mistaken if you believe that Starbucks invented the idea of the coffee house. Starbucks didn’t even open its first store east of the Rockies (Broadway and 87th Street) until around 1993 or ’94, around the same time as the two TV shows you mention were already running. Those shows became widely popular long before Starbucks became the omnipresence it is now.

Friendly neighborhood “hang-out” coffee houses have been around for years. There were many in the Village; there were even a good number on the Upper West Side. (Lalo is one of the last surviving. Others were Mozart and Figaro, of course.) They were all probably put out of business by Starbucks, but there is no way that Starbucks invented the model.

Stabucks is not the one who started the coffee house trend! It has been around for years. In fact, coffee houses were very popular in the 50’s, 60’s even into part of early 70’s. Although not exactly like Starbucks) Cafe La Fortuna was a great “coffee house”!

The Mayor needs to roll back the huge commercial tax increases that Bloomberg imposed on small building owners. My RE taxes for a small upper west side townhouse with a restaurant is over 90k a year. It used to be 40k 12 years ago. That enormous tax leaves almost no money for maintenance of the building and the restaurant shares in the tax increase which forces up inflation every year in NYC.

I hope that none of the commercial rent tax money is going towards the creation of bike lanes, since bike lanes + double parked trucks making deliveries to commercial establshments = more congested streets and traffic tie-ups.

Everyone rants on about “poor shops” being forced to close due to high rents, however the blame goes elsewhere.

Commercial rents and associated taxes make up the largest share of property revenue for New York City. Single and two family homes OTOH pay the least. For the record rental apartment buildings including RC and RS units are billed as commercial rates.

Going back to RG, then Bloomberg and now de B the city has been squeezing as much money as they can from commercial rents. This while attempting to protect “poor” single and two family home owners. Who truth to tell pay far lower rates than they would in New Jersey, Long Island or Westchester.

Real estate taxes are going up to pay for rapidly increasing pension and health care costs for city employees, which are far more generous than most other cities. Curb these expenses and costs will go down a lot. I’m not saying to get rid of them, particularly for older employees who have been in the system a while and have planned based on these figures, just make them more reasonable. Other projects that get headlines are a drop in the bucket compared to these costs.

That’s the ugly secret that the Mayor and his cronies want to keep from the public. While we need a reasonable number of civil servants there are way too many and the benefits are ridiculous. They’re unheard of in the private sector, so there is no reason public employees should have. Public employees don’t even cover their own costs, while we in the private sector fund many.

For starters, Amazon has destroyed far more small retail stores in NYC than high rents have.

Second, the proliferation of high quality supermarkets has hurt small food retailers much more than high rents. I mean, you can probably get the same gourmet cheese at your local Whole Foods as you can at Tony Danza’s shop in Little Italy.

Third, contrary to popular belief, residential rent regulation has been a disaster for NYC. Any rational and objective economist will agree. Even Paul Krugman – hardly a right wing zealot – says so. What makes Danza think commercial rent regulation would be a success?

Fourth, residential rent regulation is one of the major reasons commercial rent is so high. This is because landlords who own buildings with rent regulated apartments have to pass on the building’s expenses onto commercial tenants on the ground floor. That is, small retailers and restaurants often subsidize the costs of rent regulated apartment dwellers (whose rents can’t be raised).

Fifth, there clearly are many small restaurants and retailers who are successful in NYC because they offer a good product and service at a good price. NYC should not be enacting policies that prop up weak and poorly run businesses. Even DeBlasio says as much.

There are many reasons small businesses close in NYC. Tony Danza is offering an ignorant and hamfisted approach towards solving a complex problem.

Said this before; commercial rent regulation was done by NYS at the same time residential RC was enacted (WWII), and it was universally hated by property owners. They dragged the thing through the courts and otherwise bitterly complained enough that the laws were allowed to expire in the 1960’s.

Rent control and later stabilization was sold to landlords as a means to address a shortage of housing and correct some abuses. It was supposed to be temporary and never meant to be an “affordable housing”, scheme. However now the goal posts continue to shift to the point RS pretty much whatever NYC can get away with in court. See last week’s legal action as testament to this.

Truth to tell RS in NYC as it stands now picks winners and losers. The former are those who moved into their apartments prior to say early 1990’s or so. They have a lock on the last below market rentals. No one else will get a shot because soon as those units become vacant landlords will gut renovate, take the vacancy increase, and do whatever else possible to get the rent up to or near market. At which point affordability becomes moot since nearly universally all NYC LL’s want 40X rent in annual income for prospective tenants. This along with a good to excellent credit score and clean housing court record.

Being as all this may RC (what there is left of those units) and RS as we all know it is slowly dying.

The last of these *affordable* RS/RC units are rented by tale end Baby Boomers, their parents and perhaps grand parents generation. This puts the youngest tenants in their early to middle 50’s, and the oldest seniors/elderly. Either way over the next twenty or so decades a large number of these units will be vacated.

Death, retirement out of state, in ability to pay even low rents, health issues, etc… will empty out the last of “old” RS/RC units. What will be left are those “affordable” lottery units, and others tided to various tax abatement schemes.

What is interesting about this whole *preserving* affordable RS housing is you never hear the mayor, city council or others come out against landlords emptying out entire buildings by buying out tenants. I mean if you want to *preserve* affordable housing why turn a blind eye to something that is emptying out in some cases entire or half blocks of buildings? I guess since it benefits said RS (who often attempt not to pay taxes on their windfall), there is a different story out of City Hall.

“I guess since it benefits said RS (who often attempt not to pay taxes on their windfall)…”

My mother lived in a rent-stabilized apartment for many years, including through her retirement. Can you tell me please what you know about her practice of paying, or evading, taxes?

How do you know that *any* people “often” attempt not to pay taxes — other, of course, than to the extent that any of us tries to pay the lowest tax the law allows? Or do you see the tax system as a means of voluntarily offering up more of our earnings than we have to?

Perhaps, if you’d like people to be taxed on what you call their “windfall”, you should contact your legislative representatives and urge them to amend the tax code to require the payment of tax on the difference between a rent-stabilized rent and the fair-market rent. Until that happens, there *is* no tax required on that amount, and therefore nothing for anyone to “attempt not to pay”.

And, by the way — after you’ve started your movement to amend the tax code to impose additional financial burdens on the elderly (or force them to move out of the only homes they’ve known for decades), please let us know how that’s going.

You know before getting on your high horse and coming in with snide comment, you ought to actually *read* posts before responding.

Comment regarding tax evasion was directed towards RS tenants accepting buy-out offers then trying to either minimize or not pay full taxes on the funds received.

Buying out of a RS lease is totally unregulated. Some landlords pay funds and give a 1099. Others will do things differently.

It doesn’t help that neither federal nor state seem to be exactly sure just how such funds are to be taxed. Some tenants treat the funds for tax purposes same as if they *sold* a residential property, which isn’t exactly true since they never owned their RS unit, but had a lease.

i don’t have time to refute Sherman’s points one by one, but one of his points just jumps out and begs for a debunking.

Sherman said:

“residential rent regulation is one of the major reasons commercial rent is so high. This is because landlords who own buildings with rent regulated apartments have to pass on the building’s expenses onto commercial tenants on the ground floor. That is, small retailers and restaurants often subsidize the costs of rent regulated apartment dwellers (whose rents can’t be raised).”

It’s amazing how these conservative “free market” types abandon their own economic principles when it serves their purposes! According to “free market” economics (which i don’t believe always holds true), the astronomical commercial rents are supposedly driven by supply and demand, not cost structure.

Second, his point is easily refutable. Many building with commercial spaces on the UWS are not rent stabilized. they are either coops, condos, or market-rate rental buildings. And yet these buildings have commercial rents on the ground floor equal to or higher than the rent stabilized buildings.

If the rents for residential are capped by RS then the obvious place to look for money is the “free market” ground floor retail and or any non-regulated residential apartments.

Anyone who knows anything about NYC rental market knows *someone* else subsidizes rent stabilized or controlled tenants. That is if the LL cannot get the money one way they will another. This is just common sense as a building has certain expenses that must be covered regardless.

In those “affordable” 80/20 or whatever lottery apartments market rate tenants, taxpayers and other sources in affect pay to subsidize the low to moderate income apartments.

In a mixed use building with commercial/retail ground floor and residential above it is not unheard of for one to subsidize the other. This is especially true if the residential is rent protected and thus there is a cap on the upside of rents.

You only had to look around NYC back in the 1960’s 1970’s and 1980’s to see many RS or RC apartment buildings looked like who did it and ran. While there are various reasons one common theme was the rents didn’t support the building. A LL who had ground floor retail *might* be able to lessen some of the fiscal misery, but things often were what they were.

This was one of the main reasons behind the huge rent increases for RS units passed in the 1980’s and 1990’s. The city finally realized LL’s could not keep up their buildings with such low rents.

Now if you are referring to Mid-Town or elsewhere and thus buildings that are purely commercial and retail, that is a different story.

As have previously stated, before the IRS changed the rules most co-op buildings with ground floor retail were quite happy with rents that covered their property taxes. Once the rules were changed you began to see co-ops behaving like other owners of retail/commercial space; asking for higher rents. If your statement about what is above the retail was “immaterial”, then such buildings wouldn’t be raising their rents. But since they are, and leaving retail vacant until they find such tenant, obviously it does matter.

if a ground floor store is in a rent-stabilized building, it is impossible for that building owner to get a rental price for said commercial space above what the market will bear.

so if the ground floor commercial space next door is in a market rate building, and that space is the same, yet charges less, you are saying that the landlord for that building is willingly taking a below-market rate. in other words, leaving money on the table.

why would he/she do that?

perhaps co-ops would leave money on the table because they were happy with the commercial tenant, and their residents liked the tenant. in general for-profit landlords would not do that.

the issue of one space “subsidizing” another within a building is, for the most part, an accounting fiction, but i won’t get into that now.

If you own a store, an apartment, whatever it may be, you are going to try and get the most money for it and do so in the most efficient way possible to minimize costs. If landlords feel they can charge more in rent then they will. If they are right then they will be rewarded. If they are wrong, then they will be “punished”. I think that dynamic is the same across just about every business. If a restaurant thinks it can get away with charging $18 for a glass of wine – that is poured from a bottle that costs the restaurant $10, then they will. If they continue to sell the same amount of glasses of wine they will be rewarded. If customers stop ordering wine, then they will be hurt.

Store rents have surely gone up and up and up. But then again, what hasn’t?! Apartment rents have gone up, food costs have gone up, healthcare costs have gone up, education costs have gone up. Transportation costs have increased. Entertainment such as sports and theater tickets have skyrocketed.

The only thing that could help store rents from going up is a change to the tax code. A change that would not allow landlords to offset loss of rental income from closed stores. That is the only thing that could potentially have an impact on this issue.

Respectfully suggest all of you going on about tax deductions for vacant rental property study the US tax code.

To wit:

“If you hold property for rental purposes, you may be able to deduct your ordinary and necessary expenses (including depreciation) for managing, conserving, or maintaining the property while the property is vacant. However, you cannot deduct any loss of rental income for the period the property is vacant. “.

In other words you still must pay property taxes, water, sewage, insurance and any other costs associated with said vacant property, but those deductions are not a straight forward huge reduction in taxes. Just think of your own taxes and how deductions affect amount owed.

Meanwhile the property still is *NOT* generating income. How long an owner can hold out varies upon their individual circumstances.

Obviously the larger or even middle sized real estate property owners can afford to hold out longer than say a little guy. If you only own one building then income from all units both residential and commercial obviously is important.

Until the IRS changed rules, many co-op buildings were happy to get commercial tenants whose rents covered their property taxes. Now they are seeking to earn a bit more from commercial space so many are willing to leave ground floor retail vacant longer in hopes of nabbing someone able to pay a better rent. Meanwhile if the building starts running short of funds there are other ways to make up that loss of income including going to the shareholders.

Walking up Broadway this past Sunday I could not help but remark on the number of vacant stores. Nearly every block had vacant space, some blocks two and three storefronts papered with for rent signs.
This Is urban blight at its worst. When blocks have empty stores the entire block becomes unappealing. Landlords would rather leave stores empty (and get there tax deduction) than rent to small businesses and create a viable economy. Surely, once blocks are fully rented with attractive stores and restaurants demand for store real estate will increase. These holdouts like the former location of Banana Republic on Broadway and 86th, the former Duane Reade on Broadway and 84th, the macDonalds, the Sleepys on 99th, the Hot n Crusty, Favor Shoes, on and on. Some of these stores have been vacant for years. Landlords need another kind of incentive to rent. Taking away their deduction for loss of rent is a good place to start.

Third Avenue from about 62nd through 72nd has a slew of empty store fronts including more square footage recently added when Gracious Home went bankrupt.

One thing to look for is what’s going on with residential above the “empty” commercial space. Where you see both ground floor retail *and* most or all residential units vacant, that is a clear sign property or properties are being emptied out for redevelopment.

On First Avenue from 79th to 80th on the east side of the avenue noticed at least half the block ground floor retail is vacant. Walked by there one evening last week and saw all the lights were on in the apartments above, but they are vacant. This tells me those low rise buildings aren’t long for this world and the block or at least half is going be redeveloped.

The city is part of the problem. It incentivizes greed. Tax breaks for empty space and adition help to renovate after 18 months or 2 years. The mayor can pretend he’s blameless but that’s tripe…uncooked and unseasoned!

The loss of community commerce is an important issue, especially on the UWS. The incumbent council member has been ineffective in preventing the loss of dozens of stores during her term. If elected, I will introduce the “Legacy Stores Act.” This initiative will provide stores with ten or more years in the same location with tax credits on a sliding scale. The longer the store stays in business,the bigger the tax credit. We need more Zingone’s and Bicycle Renaissance businesses to maintain our community’s character.

So in other words you plan to provide a disincentive for new business from opening on the UWS since those business owners know that they will pay more in taxes than other stores based only on longevity.
Got it.

An idea of tax benefits for the buildings that don’t hike their commercial rents so high, so that only chains can come in. Asking people not to be greedy is a touch sell. sure, it sounds great, and no one wants to imagine him/herself as being greedy – such an ugly word and concept. Business people, I imagine, would see themselves as clever and “good businessmen.” But, as an uws’er, the empty storefronts and being overrun by chains – this detracts from the glorious sense of community that is the uws. On one hand you have the good people of e’s bar and Jacob’s pickles holding fundraisers to help the people who lost their homes in the fire a month ago, and on the other, you have scores of stores closing because their rents go too high, too quickly. I think definite tax breaks to those owners in who building organizations do community support, service/outreach, and keep their rents for local businesses lower would be incentive. and PR – so that the neighbors – those of us in the community, make the extra effort to use those stores, rather than others. Thoughts?

The whole idea of spending so much money for a Starbuck coffee is that you are renting a seat in the city to rest and catch up on line. If they remove the seats they might as well sell their coffee for $2– if that much.

I suggest that they put a 30 minute maximum on their internet. That would push customers out.

I think it’s ridiculous to say we are losing stores due to hiked rents via property taxes–in NYC. Maybe that’s true for a small commercial owner who lives in the same building as the store they rent to and might actually care about the store and I would believe that in other towns and cities. But in NYC, I believe it’s all about supply and demand, particularly for owners who have no connection to the neighborhood. Owners will charge as much as they can get, and if a bank or large chain will pay it, the owner will charge it regardless of the tax. If taxes go down, I think it’s a fantasy to think rents will also go down in this city.

Have said this before each time this debate comes up, and am doing so again; rent (high or whatever) are not the sole cause of why so much retail space is vacant. Simply put times have and are continuing to change, and that has put great pressure on brick and mortar retail.

First and foremost NYC/NYS is one of the most expensive places to run any sort of business. Both state and city over the past year or so have upped that ante by increasing minimum wages, changing over time rules, adding PTO regulations, banning this or that employment/hiring screening process (the latest as of yesterday is asking about previous salary history), and so it goes.

On top of those regulations both NYC and NYS have a bewildering, byzantine and vast array of laws, rules and regulations requiring all sort of licenses or permits. Then there are the various fines extracted from a business for failing this or that rule or regulation.

Year after year, and by any measure NYS/NYC rank near dead last as a business friendly climate. Sooner or later that trickles down into the type and number of businesses open.

Ground floor retail is responsible for any fines levied by the city in most cases. This means if you sweep the sidewalk first thing in the morning, then go inside to actually run your business, and some nanny pushing a pram lets her charge drop a candy wrapper on the sidewalk, you better get to it before DSNY does; otherwise there will be a fine.

All this is even before the fact Internet/online has drastically changed the retail landscape. It is hard to believe that ten or twenty years ago few people (including some of the smartest) thought online shopping would never take off in a major way. Well now that Mr. Bezos has more money than God I guess we can say that simply isn’t true.

Long story short physical retail is dying because many places simply cannot compete against Internet/online. That is they cannot sell enough product or a service to cover rent and other expenses.

Gracious Home is a recent example of this; for decades they survived but now forced by circumstances into bankruptcy GH has shrunk to barely 1/3 or 1/4 its former size.

There are now more “Uber” type cars on NYC streets than yellow taxis. That tells you how far and deep online is penetrating into all sorts of industries.

Have said this before as well; most every single residential building in Manhattan is being overwhelmed with packages. Amazon, USPS, UPS, FedEx, etc… to the point places are running out of space to keep the stuff.